Moody's ups Indonesia view to positive

Moody's Investors Service said it changed the outlook to positive from stable on Indonesia's B2 foreign currency country ceiling for bonds, its B3 foreign currency country ceiling for bank deposits, and the Indonesian government's B2 foreign and local currency ratings.

Moody's said that the outlook change was prompted by the continuing improvement in Indonesia's debt ratios, both in terms of foreign currency debt and the government's overall debt position. The ratio of total external debt to current account receipts has improved since the 1997 Asian financial crisis, although it remains high, and the ratio of government debt to GDP has improved steeply in the last few years.

Improved government debt ratios are due to a combination of fiscal policies that have kept budget deficits low, relatively rapid nominal GDP growth, and a strengthening exchange rate, said Moody's. The government now expects a budget deficit of 1.0% of GDP this year and forecasts a balanced position by 2008.

As a result, the rating agency said it expects the government's debt position to continue to improve over the next several years.

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